Interview: Abdul Hussain bin Ali Mirza
Which specific policies is the ministry implementing with regard to the reduction of subsidies, both at the consumer and commercial level?
ABDUL HUSSAIN BIN ALI MIRZA: The electricity consumption levels per capita in the kingdom have witnessed record high levels and averaged 11,000 KWh per capita over the past five years – the ninth-highest per capita consumption in the world – based on a 2012 World Bank study. This exceeds the global consumption average and that of industrialised nations such as the US, Japan and Germany. Frankly, energy subsidies have resulted in inefficiency when combined with Bahrain’s rapid development.
The government provides an annual subsidy of some BD350m ($921.9m) for the electricity and water sectors; however, a bill has recently been approved to gradually reduce subsidies for the business segment. Customers whose annual consumption of electricity exceeds 250,000 KWh will see their per-KWh tariff rise by BD0.001 ($0.003) each year from the current rate of BD0.016 ($0.042). In a similar manner, the water tariff for business users who consume more than 1000 cu metres per month will increase annually by BD0.10 ($0.26) per cu metre.
In order to promote efficiency, the government decided to impose new gas prices in early 2015. We do not plan to raise prices suddenly; therefore, major consumers will have ample time to take steps towards improving energy efficiency and cost effectiveness. Furthermore, we are trying to redirect the subsidies to those who need them.
What types of projects have been prioritised for investments under the GCC Support Programme, and what are the conditions for foreign investors?
ALI MIRZA: Part of the Gulf Development Programme allocated to the electricity and water development plans will be used for the construction of a 400-KV transmission system valued at $740m that will provide the future backbone of the transmission network. Electricity access will be improved with the implementation of this 400-KV network. The launch of the network will ensure a robust, safe, secure and reliable power supply to all domestic, commercial and industrial consumers in Bahrain.
We are currently in the process of strategic finance decision making for phase II of the Al Dur power plant and exploring the financing options available to the government. The question is now whether it will be tendered to the private sector as was the case with the previous three stations owned and operated by the private sector, or if another form of soft finance available to the government will be used as per the prevailing economic situation in 2013. This phase is estimated to cost approximately $1.5bn.
What are the most cost-effective ways for increasing the share of renewable energy in the broader energy mix?
ALI MIRZA: At the moment, the cost of solar infrastructure on a wide scale remains relatively expensive and not competitive, given Bahrain’s subsidised fossil fuels. That said, a clear downward trend in the cost of solar infrastructure is imminent.
The government launched the renewable energy initiative a few years ago by embarking on the construction of a 5-MW pilot solar energy power production facility in three separate locations, namely the oil town of Awali, which has an installed solar capacity of about 1.8 MW; the Bahrain Refinery, which has a capacity of approximately 2.7 MW; and the University of Bahrain, which has an installed capacity of about 0.5 MW.
We hope that this investment will lay the groundwork for the future of Bahrain’s renewable energy development. The pilot solar energy production facility is expected to provide important observation data for the government to take strategic decisions and serve as a roadmap for the implementation these sources of renewable energy in Bahrain.
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